By our nature Irish people are uncomfortable discussing their “Wealth” in any meaningful way – typically until it is too late.

We have worked on numerous cases where, with some planning, significant liabilities could have been mitigated – but this would have required discussing their accumulated wealth with others and many are still very uncomfortable with this.

Our services on Inheritance Planning mirror those on Succession Planning whereby the foundations of the plan are derived from meaningful conversations with those that wish to pass on or protect their asset base. While much media attention has been given to Business Succession, the passing of family wealth in a tax-efficient manner doesn’t ever achieve the same level of attention. This lack of attention however should not take away from its importance.

Below we capture some of the headline matters that impact on the Inheritance Planning decision making process. As with all such decisions active engagement throughout the process is key to a successful outcome.

Key factors impacting the Inheritance Planning decision-making process

When is the right time to start Inheritance Planning? There is no particular date by which one needs to have commenced or completed the process but there are a few key considerations worth being conscious of:

  • Where passing on a business as part of the plan there are specific reliefs which are more generous up to age 66 than they are thereafter
  • Where one wishes to pay towards the future Inheritance tax liability of their children the policy to do this typically needs to be established before the person reaches 75 years of age.

The vast majority of people’s wealth is typically passed from parent to child. To that end there are thresholds in existence which allow, at present, up to €320,000 to be passed from parent to child without any exposure to Capital Acquisitions Tax on same.

There are other less generous thresholds for other relations as well.

Whilst the financial and tax consequences can be outlined and understood a very important aspect to the whole plan is the trust that those giving have in those that are receiving. This can never be emphasised enough.

There are many elaborate structures (including Trusts) available which can be utilised to pass on value without control. However, without the trust factor existing they can often be futile discussions.

In any year anyone can gift up to €3,000 to any other person without there being any tax implications.

This relief is very much underutilised but is often the simplest to put in place.

The above is not an exhaustive list. However, the key consideration is the wishes of the person passing on the wealth and how it best suits their circumstances. The sooner the conversation starts typically the better the answer that can be achieved.

Oliver O'Connor
Partner - Private Client and Wealth Management
Oliver O'Connor